National Company Law Tribunal New Delhi: In a competition appeal filed by Google LLC and Google India Private Limited, challenged the order passed by the Competition Commission of India (‘CCI’), which had found google to have abused its dominant position in contravention of the provisions of Section 4(2)(a)(i), 4(2)(b)(ii), 4(2)(c), 4(2)(d) and 4(2)(e) of the Competition Act, 2002 (‘Competition Act’) and had directed Google to cease and desist from indulging in anti-competitive practices that were found to be in contravention of the provisions of Section 4 of the Competition Act. Further in exercise of power under Section 27(b) Competition Act, the CCI had imposed penalty to the tune of INR 1337.76 crore. The division bench of Justice Ashok Bhushan, Chairperson* and Dr. Alok Srivastava, Technical Member while exercising its competition appeal jurisdiction, upheld the INR 1337.76 crore fine imposed by CCI on Google for abuse of its dominant position in the Android Mobile Device Ecosystem but set aside certain key directions.
In the matter at hand, NCLAT had refused to grant interim relief to Google and directed to deposit 10% of INR 936 crore penalty vide order dated 04-01-2023. The same was challenged before the Supreme Court which was disposed of vide order dated 19-01-2023 refusing to interfere with the order passed by NCLAT.
Google LLC contended that the CCI’s order suffered from confirmation bias and was based on a similar order of the European Commission in 2018. The company’s agreements do not prevent equipment manufacturers from pre-installing competing apps with similar functionality. It was further stated that mere dominance in a market does not mean abuse of dominance, and the reason Google is popular among users is because of its effectiveness.
CCI on the other hand, stated that Google’s policies in India could be summed up in 5 phrases:
a) digital feudalism,
b) digital slavery,
c) technological captivity,
d) chokepoint capitalism and
e) consumer exploitation.
It was argued that the companies who had not signed the Google’s contract had gone extinct and it abused its dominant position in the Android Operating System (OS) market to indulge in unfair trade practices by restricting entry of other applications in its Play Store. Google controls nearly 98% of the smartphone market in the country, and if it was found to be violating competition laws, the regulator was duty bound to direct the company to mend its ways.
The CCI exercising its powers under Section 27 of the Competition Act, also directed Google to cease and desist from indulging in anti-competitive practices that had been found to be in contravention of the provisions of Section 4 of the Competition Act.
The Commission had found:
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Mandatory pre-installation of the entire Google Mobile Suite (‘GMS’) with no option to un-install the same amounts to imposition of unfair condition on the device manufacturers;
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Google used its dominant position in the online search market resulting in denial of market access for competing search apps;
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Google leveraged its dominant position in the app store market for Android OS to protect its position in online general search;
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Google leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in online video hosting platform (OVHP) market through YouTube;
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Google, by making pre-installation of Google’s proprietary apps (particularly Google Play Store) reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android.
The Commission had issued the following directions to Google which could aid in modifying its conduct.
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Original Equipment Manufacturers (‘OEM’) should not be forced to pre-install a bouquet of applications, and shall not be restrained from deciding the placement of pre-installed apps, on their smart devices;
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Licensing of Play Store to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome, YouTube, Google Maps, Gmail or any other app;
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Google shall not offer any monetary or other incentives to OEMs for ensuring exclusivity for its search services;
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Google shall not incentivise or obligate OEMs for not selling smart devices based on Android forks.
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Google shall not restrict uninstalling of its pre-installed apps by the users.
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Google shall allow users, during the initial device setup, to choose their default search engine for all search entry points. Users should have the flexibility to easily set as well as easily change the default settings.
There were multiple issues for consideration before the Tribunal that were answered in the following manner:
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The Tribunal answered the first issue by stating that for proving abuse of dominance under Section 4, effective analysis was required to be done and the test to be employed was whether the abusive conduct is anti-competitive or not.
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The Tribunal opined that the Commission had proceeded to consider the materials on the record and submissions of the parties with respect to each of the market and recorded findings and conclusions after considering the evidence on record. Hence, were unable to accept the submission of the appellant that the order of the Commission was replete with confirmation bias.
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The Tribunal stated that pre-installation of entire Google Mobile Services (‘GMS’) Suite amounted to imposing of unfair condition on (‘OEMs’) which was an abuse of dominant position by the appellants resulting in breach of Section 4(2)(a)(i) and 4(2)(d) of the Competition Act.
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The Tribunal was of the view that CCI while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d) of the Competition Act had considered the evidence on record and had returned finding that the conduct of the appellant harms the competition.
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The Tribunal stated that the appellants by making pre-installation of GMS Suite conditional to signing of Anti Fragmentation Agreement (‘AFA’) or Android Compatibility Commitment (‘ACC’) for all Android devices manufacturers, has reduced the ability and incentive of devices manufacturers to develop and sell self-device operating or alternative version of Android and Android Forks and thereby limited technical and scientific development, which was breach of provisions of Section 4(2)(b)(ii) of the Competition Act. Further said that the CCI while returning its finding has considered the evidence on record in respect of Section 4(2)(b)(ii) of the Competition Act and has also returned finding on anti-competitive conduct of the appellant.
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The Tribunal stated that the appellant had perpetuated its dominant position in the Online Search Market resulting in denial of market access for competing Search Apps in breach of Section 4(2)(c) of the Competition Act. It was noted that CCI while returning its finding on breach of Section 4(2)(c) of the Competition Act had considered the evidence on record and had also recorded finding regarding appellant’s conduct being anti-competitive.
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The Tribunal was of the view that the appellant had leveraged its dominant position in Play Store to protect its dominant position in Online General Search in breach of Section 4(2)(e) of the Competition Act. CCI while returning its finding had considered the evidence on record and has also returned finding regarding the appellants conduct being anti-competitive.
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The Bench stated that the appellant had abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the Competition Act. CCI while returning its finding had considered the evidence on record and has also returned finding regarding the appellants conduct being anti-competitive.
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Th Bench stated that the appellant had abused its dominant position by tying up of YouTube App with Play Store and thereby violated provisions of Section 4(2)(e) of the Competition Act. CCI while returning its finding had considered the evidence on record and had also returned finding regarding the appellants conduct being anti-competitive.
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The Bench stated that the investigation conducted by the Director General did not violate the principle of natural justice.
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The Tribunal opined that the investigation conducted by the Director General would not be vitiated due to the Director General framing leading questions to elicit information.
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The Bench stated that the impugned order by CCI was not vitiated on the ground that CCI did not consist of a Judicial Member.
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The Tribunal directed for deletion of directions at paragraph 617.3, 617.9, 617.10 and 617.7 while upholding other directions in paragraph 617 stated in the order passed by CCI. The other directions issued by CCI were in accordance with the findings and thus were upheld.
Abridged version of what the directions had stated earlier:
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Paragraph 617.3- Google shall not deny access to its play services Application Programming Interface (‘API’) to disadvantage OEM, app developers and its existing or potential competitors.
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Paragraph 617.7- Google shall not restrict uninstalling of its pre-installed apps by the users.
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Paragraph 617.9- Google shall allow the developers of app stores to distribute their app stores through Google Play Store.
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Paragraph 617.10- Google shall not restrict the ability of app developers in any manner to distribute their apps through side-loading.
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The Bench stated that while calculating the ‘relevant turnover’, CCI had correctly considered the sum total of revenue of various segments or heads in India arising out of the entire business of Google India’s operations of Android OS based mobiles. Therefore, agreed with CCI’s decision to quantify the monetary penalties on the basis of data presented by Google.
The appellant was accordingly directed to deposit the amount of penalty after adjusting the 10% amount of penalty as deposited under order dated 04.01.2023 within a period of 30 days from the date of the order.
[Google LLC v Competition Commission of India, Competition Appeal (Appellate Tribunal) No. 1 of 2023, decided on 29-03-2023]
Judgment authored by Justice Ashok Bhushan Chairperson
Messiah of the sufferers: Bidding adieu to Justice Ashok Bhushan
Advocates who appeared in this case :
For the appellant- Advocate Maninder Singh & Senior Advocate Arun Kathpalia, Advocate Vijayendra Pratap Singh, Advocate Ravisekhar Nair, Advocate Hemangini Dadwal, Advocate Parthsarathi Jha, Advocate Toshit Shandilya, Advocate Mohith Gauri, Advocate Sayobani Basu, Advocate Arunima Chatterjee, Advocate Vanya Chhabra, Advocate Atish Ghoshal, Advocate Deepanshu Poddar, Advocate Ketki Agrawal, Advocate Bhaavi Agarwal, Advocate Abhisar Vidyarthi, Advocate Bani Brar, Advocate Kshitij Wadhwa, Advocate Aditya Dhupar, Advocate Prabhas Bajaj, Advocate Ajay Sabharwal.
For the respondent- Additional Solicitor General N. Venkataraman, Advocate Samar Bansal, Advocate Manu Chaturvedi, Advocate Aakriti Singh, Advocate Vedant Kapur, Advocate Shruti Shivkumar, Advocate V. Chandrashekhara Bharathi, Advocate Amritha Chandramouli, Advocate Rahul Vijay Kumar, Advocate Ram Narayan, Advocate Madhav Gupta, Advocate Shama Nargis, Advocate Davander Prasad, Advocate Shweta Gupta, Advocate Abir Roy, Advocate Vivek Pandey, Advocate Aman Shankar, Advocate Sukanya Viswanathan, Advocate T. Sundar Ramanathan, Senior Advocate Amit Sibal, Advocate Naval Chopra, Advocate Yaman Verma, Advocate Aman Singh Sethi, Advocate Shally Bhasin, Advocate Raveena Lalit, Advocate Prerna Parashar, Advocate Parinita Kare, Advocate Shivek Endlaw, Advocate Rohan Bhargava, Advocate Prateek Yadav, Advocate Rishabh Sharma, Advocate Saksham Dhingra, Advocate Darpan Sachdeva, Senior Advocate Rajshekhar Rao, Advocate Naval Chopra, Advocate Yaman Verma, Advocate Aman Singh Sethi, Advocate Ajit Warrier, Advocate Raveena Lalit, Advocate Prerna Parashar, AdvocateParinita Kare, Advocate Prateek Yadav, Advocate Prateek Gupta, Advocate Shivek Endlaw, Advocate Shally Bhasin, Advocate Darpan, Advocate Rohan Bhargava, Advocate HarshilWason, Advocate Yashraj Samant,Advocate Chandini Anand